FSA chariman Adair Turner commented on the findings of an internal audit into the authority's handling of the Libor scandal (emphasis added):
As the financial crisis developed in 2007 to 2008, the FSA’s bank supervisors were primarily focused on ensuring they understood the prudential implications of severe market dislocation. And the FSA had no formal regulatory responsibility for the LIBOR submission process. As a result, the FSA did not respond rapidly to clues that lowballing might be occurring.
The Report also reveals that while some information was available relating to lowballing, there is, for the period covered, no evidence of any information, direct or indirect, available to the FSA which indicated that traders were manipulating LIBOR for profit. All of the authorities, both UK and US and elsewhere only discovered trader manipulation as a by-product of enquiries launched into potential lowballing. This raises important issues about the regulatory tools best suited to identifying such market manipulation. More intense supervision may not be the most appropriate lever. Better whistleblowing procedures, greater accountability of top management, and more intense requirements for self-reporting of suspicious activity may turn out to be more effective tools.